TMI Blog2007 (9) TMI 13X X X X Extracts X X X X X X X X Extracts X X X X ..... 3 - - - Dated:- 3-9-2007 - ORDER 1. In this reference, relevant to the Assessment Year 1976-77, the following question of law has been referred for our opinion under Section 256 (1) of the Income Tax Act, 1961('Act'): "Whether on the facts and in the circumstances of the case, the liability to pay the sales tax of Rs.4,24,029/- made up of Rs.3,22,482/- being refund of sales tax received by th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... amount of Rs.1,01,507/- being provision for sales tax made in the accounting period relevant to the assessment year 1976-77 is chargeable to tax. The admitted position is that the assessee is following the mercantile system of accounting. Initially there was some dispute whether the ice cream sold by the assessee was exigible to tax or not. This Court in its judgment dated 27 th March, 1974 held ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... red that no sales tax was payable on the sale of ice cream and further the Supreme Court also did not grant a stay of the operation of the judgment of this Court. Learned counsel for the Revenue submitted that since the assessee did not in fact pay any sales tax on the sale of ice cream in the relevant previous year, there was no question of any provision for sales tax being made. 2. Learned c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed it. So long as the appeal filed by the Revenue was pending before the Supreme Court, the liability had accrued in so far as the assessee was concerned. The Allahabad High Court in J.K. Synthetics Limited v. O.S. Bajpai, ITO,m Central Circle-V, Kanpur [1976] 105 ITR 864 has held that an assessee is entitled to claim deduction in respect of the liability of excise duty for which it had made a pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt previous year. There would be no loss of tax in so far as the Revenue is concerned. It can now tax in the Assessment Year 1996-97, the entire amount provided for by the assessee towards sales tax liability. 3. Under the circumstances, we answer the second part of the question in the negative that is in favour of the assessee and against the revenue. 4. The reference is disposed of accor ..... X X X X Extracts X X X X X X X X Extracts X X X X
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